A Young Professional's Guide to Insurance, Protecting Your Home from Flooding, Plus More

Welcome to the September edition of the West Craven newsletter.

This month, we share a young professional's guide to insurance, we offer some guidance on how to protect your home from flooding, we reveal why 60% of startups lack basic cover and we investigate why two thirds of high net homeowners are underinsured.

A Young Professional's Guide to Essential Insurance

 

The idea of freedom that is intertwined with our image of adulthood is one of the most exciting things about striking out on your own. You can own property or a car and you actually have a choice when it comes to where you go on holiday. But for each life choice you make, there is an equal responsibility. In this case, can you legally and responsibly take part in the above roles and activities without the correct insurance?

If this is your first face to face with the idea of buying insurance, we have compiled a list to take you through the essential (and sometimes legally obligated) insurance policies.

Home Insurance
Imagine saving for years to be able to buy your own house, only for a disastrous event like a fire or flood to rob you of your home and investment. A home insurance policy ensures that you have financial support should the worst happen, giving you peace of mind.

If you decide to rent a home, you won’t need a home insurance policy, as it isn’t your responsibility to safeguard your landlord’s property. However, whether you rent or buy you should still purchase a contents insurance policy. Contents insurance protects your possessions such as electronics, furniture etc. against risks like theft or fire. Those who rent will often make the mistake of thinking that their landlord’s home policy will protect their contents.

Travel Insurance
Holidays are supposed to be relaxing! So if you lose your spending money, have a personal possession like a phone or camera stolen or suffer an injury and end up stuck in a hospital bed for weeks, that can put a real dampener on your good time.

The best thing about a travel policy is it can be shaped to suit your destination and planned activities. Going to a country like the U.S. where medical bills are notoriously high? You might want to consider having a policy with a good deal more coverage for hospital bills. Or maybe you’re visiting a city where tourists are frequently targeted for theft? It might be a good idea to invest a little extra money in a policy that covers all your possessions with little to no excess.

Car Insurance
You cannot legally drive your car in the UK without a car insurance policy, so this one really is a no brainer. If you are caught in an accident without insurance, you could be liable for a maximum &5000 and 6 points on your license. There are different types of coverage for you to choose from:

Third Party Insurance
This is the minimum requirement for car drivers. If you cause damage to someone else’s vehicle, the insurance policy will pay for the damage caused to the third party, but not your vehicle.

Third Party Fire & Theft
A step up from third-party cover, that included protection to your vehicle in instances of damage caused by fire or if it is stolen.

Comprehensive
The most expensive policy of the three, but arguably the most useful, comprehensive covers you against most instances of damage to your car, as well as any damage you cause to another’s vehicle or property.

Which one you choose will probably depend on the age and condition of your car, as well as your financial situation.

Protecting Your Home From Flooding

 

Our climate is changing and sadly flood events are becoming more common. While insurance can cater for the financial cost, the emotional impact is more difficult. However, by installing protective measures, you can give yourself some control over the risk of flood and minimise the impact should it occur.

Last year saw most parts of the UK being affected, with thousands of properties being flooded.

Despite efforts to improve and strengthen community flood defence schemes, many homes and businesses remain vulnerable.

Here are some products on the market that are designed to offer protection:

• Guards that can be quickly fitted when flooding is imminent. These can stop water from seeping through gaps in external doors, such as front and patio doors.
• Covers that can be fitted over ventilation bricks.
• "Non-return" values fitted to drain pipes and other pipes that could allow water to back-up during a flood.
• Raising damp-proof courses and sealing floors.

If the flood water on the outside of your property becomes deeper than 1m, it is recommended that the water is allowed to come into your home as this depth of water can create sufficient pressure on your outer walls, causing them to move and collapse and resulting in serious structural damage.

You should consider:

• Replacing timber floors with concrete and carpet with tiles - at the point of redecorating a room, lay tiles rather than carpet or laminate flooring.
• Replacing MDF or chipboard kitchen or bathroom units with plastic or steel alternatives - again this could be done if these rooms were being redecorated at any time.
• Replacing gypsum plaster, which is susceptible to water, with more water resistant materials such as lime plaster or cement render.
• Having plastic skirting boards, doors and door surrounds or alternatively varnish these items thoroughly to limit water damage.
• Raising key electrical items such as boilers, wall sockets and meters above the likely flood level.

Want to know if your home or business is at risk? An estimated one in six homes is located within at-risk areas. You can sign up to the Environment Agency’s flood warning service.

60% of Startup Companies Lack Basic Cover

 

 

Over the last three years, more than two million budding entrepreneurs have taken the leap and started their own business, with official figures from Axa showing 3.5 million more will be looking to join them in the near future. However, it appears these new CEOs-in-waiting are all willing to take big risks with their investment, as the majority of them are operating underinsured.

According to a recent study, just four in ten of the new businesses started in the last three years had basic business insurance. Expanding to businesses in operation for four years sees the number of businesses with insurance increased to six in ten, but that still leaves a worrying number of start-ups without protection.

Whilst you could categorise many of the business insurance policies under “don’t buy at your own peril”, employers’ liability insurance, which covers injuries and illness, is a legal requirement. Non-compliance can see your business being slapped with penalties of &2,500 per day.

The most common reason businesses gave for not buying insurance was not the price, it was simply an under-appreciation of the risk presented to their business. Nearly three-quarters of those without cover gave the small size of their business as their reason for not buying insurance, whilst a further 25% hadn’t even considered a policy.

The types of claims being made have also evolved in recent years, with the previously wide spread “trade specific” claims such as industrial deafness or repetitive strain injury falling by 73% since 2013, businesses becoming better at spotting and reducing these types of risk. However, “non-trade specific” claims such as trips and slips, falling from step ladders or even being scalded by a hot drink have doubled since 2014.

Unlike Employer’s Liability, Professional Indemnity is not a legal requirement, but for recent start-ups like professional freelancers, it could mean the difference between security and financial ruin. Professional indemnity covers costs for compensation following alleged professional negligence, including breaches of intellectual property and data protection laws. It was discovered that new freelancers were the least insured, with only a quarter of those surveyed having professional indemnity cover. The figures for older freelancers were only marginally better, with the rate of those with indemnity insurance reaching 35%.

Only One Third of High Net Worth Home Owners are Fully Covered

 

 

A recent survey found that two-thirds of wealthy homeowners lack the proper amount of insurance for their houses and properties.

According to the results of the survey, 65% of those who owned a high net worth home policy, who also had a building and contents valuation in 2016 were underinsured. On average, those clients were underinsured by 50% of the original sum insured.

Being underinsured means you do not have adequate cover for all of your possessions, meaning that should the worst happen like a fire or flood, you will only receive a fraction of the amount you need to rebuild.

Why is this happening?

Underinsurance is a common issue with high net worth customers, as they often own a good deal of items that go up in value, the amount needed to safeguard your possessions is constantly fluctuating.

Other causes include inheriting items and incorrectly calculating or attempting to estimate the true combined value of your possessions.

Concerned you might be uninsured? Make sure you check the following:

• When was the last time you had a valuation? If you bought the policy in 2014 and haven’t had a professional valuation since then, there’s a strong risk that you are underinsured.

• When you had your last valuation, were areas like annexes, garages, basements, and sheds included? If not, you should arrange for a new valuation.

• Do you own anything like wine or art that tends to go up and down in value depending on age and trends? These are usually categorised as ‘passion assets’ and will need re-valuing regularly.

• Have you had any lifestyle changes? Maybe a new child or an older one has moved out? That can have an effect on your property value.

• Do you have any valuable individual pieces on your property? If so you should have them valued and then check them against the single-item limit on your policy. If doesn’t provide adequate cover, you might need to increase the limit.

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